24 Hour Fitness Worldwide Inc. sought court protection from its creditors, unable to keep up with debt payments after the prolonged shutdown caused by coronavirus outbreak, Bloomberg News reported. The fitness chain’s chapter 11 petition was filed in Delaware, court papers show. Even before the onslaught of the coronavirus, middle-tier operators like 24 Hour struggled with customer defections to higher-end or budget-friendly fitness options. The gym operator posted a 2 percent revenue decline in unaudited fourth-quarter earnings, Bloomberg reported. Privately held 24 Hour, with more than 430 clubs and based in San Ramon, Calif., reported a slide in 2019 earnings partly due to the rocky debut of an automated system for checking in and signing up customers. Memberships at the company fell to 3.4 million in 2019’s third quarter from 3.5 million in the second quarter, according to Moody’s Investors Service. Chief Executive Officer Tony Ueber had to close all of the chain’s gyms in the middle of March, in line with other businesses across the U.S., to stop the spread of the virus. The company fully drew its $120 million credit line to cope with the expected impact of the pandemic. Management had been in talks with creditors to rework its debt load, but negotiations ended in a stalemate around the time of the closures, 24 Hour Fitness said in a March 23 earnings report.
